Introduction

1.  This year, for the first time, the Ministry of Defence has merged its Annual Performance Report and its Departmental Resource Accounts into one document: the MOD Annual Report and Accounts. This offers readers a more comprehensive and clearer record of the Ministry of Defence's performance during the last financial year. The Annual Report and Accounts is divided into two discrete parts: Section 1 covers non-financial performance (which was previously published as the Annual Performance Report) and Section 2 covers financial performance (which was previously published as the Departmental Resource Accounts).

Section 1

2.  Section 1 details the Department's performance against its Public Service Agreement (PSA) targets. It is structured along the lines of the Defence Balanced Scorecard, through which the Department's performance is reported internally. The Defence Balanced Scorecard encapsulates the Defence Management Board's key obectives and priorities, including the Department's PSA targets, over the full range of MOD business. In the Report, these objectives are grouped into four chapters or 'perspectives' (as shown in Figure 1): Output and Deliverables, Resource Management, Enabling Processes, and Building for the Future. Within these perspectives, the main section headings correspond to high-level Scorecard objectives (i.e. Operations, Effectiveness, Policy, etc.). In addition, each chapter provides a more detailed account of MOD performance and activity in those areas covered by the Scorecard and across a broader range of related subjects.

3.  The Scorecard was introduced in April 2000 and aimed to improve the assessment, reporting and management of Departmental performance. By tracking progress against clearly defined performance measures, including the MOD's PSA targets, the Scorecard focuses the Board's attention on what is really important in delivering outputs and achieving results. Its strength as a performance management tool lies in its ability to clarify and communicate the Defence Management Board's strategic intent and in its flexibility to adapt and improve. Further development of the Scorecard is discussed in paragraph 149.

Performance against PSA targets

4.  The MOD's progress against its PSA targets is addressed throughout this report and, for ease of reference, is also summarised at Annex B. Of the 22 individual PSA targets from the 1998 Comprehensive Spending Review and the 2000 Spending Review, 12 have been met, four are on course to be met, three were partly met, two have been missed, and one is not yet assessed. The Department published its PSA performance at the half-year point with The Government's Expenditure Plans 2003/2004 to 2005/06: Ministry of Defence (Cm 5912, May 2003).

5.  The performance of the Defence agencies is covered at Annex C, whilst MOD performance against mandatory Government Standards is described at Annex D.

Section 2

6.  Under the Government Resources and Accounts Act 2000, the Department is required to prepare resource accounts for each financial year, in conformity with a Treasury direction, detailing the resources acquired, held, or disposed of during the year and the use of resources by the Department during the year.

7.  The resource accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Department, the net resource outturn, resources applied to objectives, recognised gains and losses, and cash flows for the financial year.

8.  The Treasury has appointed the Permanent Head of the Department as Accounting Officer of the Department, with responsibility for preparing the Department's accounts and for transmitting them to the Comptroller and Auditor General. In preparing the accounts the Accounting Officer is required to comply with the Resource Accounting Manual, prepared by the Treasury.

Further Information

9.  Other sources of information relevant to MOD performance include the documents listed below, all of which are available on the MOD website at http://www.mod.uk. An overview of the top-level organisation and management of the MOD is shown at Annex A.

• The Government's Expenditure Plans 2003/04 to 2005/06: Ministry of Defence (Cm 5912, May 2003);
   
• A New Chapter to the Strategic Defence Review (July 2003);
   
• UK Defence Statistics 2003 (September 2003);
   
• Main Supply Estimates 2003/04 (HC 648);
   
• Supplementary Budgetary Information 2003/04 (Cm 5797).

Last Updated: 3 Dec 03